Hemas Group revenue up but profits ease
View(s):Hemas Holdings has reported a consolidated revenue of Rs.11.4 billion for the 3-months ending June 2017, up by 14.9 per cent from the same 2016 period while post-tax profit for the period fell marginally by 3.3 per cent to Rs. 677,237 million.
The quarterly accounts, released to the Colombo Stock Exchange, revealed that pre-tax profit was lower by 4.3 per cent at Rs. 966,645 against the 2016 period. Steven Enderby, CEO – Hemas Holdings, in his review said that the healthcare sector was the main contributor to growth during the quarter.
“The key factors that influenced the decline in profitability were subdued consumer spending resulting from increased inflation and VAT, flooding and landslides in Sri Lanka and exchange rate depreciation. In addition, headwinds faced in our Bangladesh operation and losses incurred at Leisure, Travel and Aviation (LTA) segment also impacted our profitability. Our consumer business recorded a revenue of Rs.4.2 billion for the first three months ending June 30, a decline of 1.5 per cent YoY,” he said.
The CEO’s review noted that despite the challenging domestic macro environment, the group’s local businesses reported steady growth in key personal care categories with market shares being maintained across most major categories. The decline in revenue and profitability was mainly on account of below par performance in its Bangladesh operation which was impacted by bad weather conditions during Q1, and the restructuring of the sales and distribution network.
“With regard to new markets, we incurred startup losses in West Bengal as we commenced operations. Consolidated healthcare sector revenue for the first three months under review stood at Rs.5.1 billion, a YoY increase of 18.7 per cent whilst operating profit and PAT grew at 22.4 per cent and 54.3 per cent. Hemas pharmaceutical distribution operation registered strong revenue growth increasing its market leadership position. However, managing the impact of price regulation and devaluations in the wake of depreciation of the rupee was a key operational challenge. As a result, pharmaceutical distribution profitability was negatively impacted. However, this decline in profitability was mitigated by the strong growth in hospitals. Hospitals operated at high capacity levels over the quarter in part due to the dengue epidemic,” the review noted.
The leisure, travel and aviation business recorded a revenue drop with overall arrivals to Sri Lanka witnessing moderate growth as a result of the negative publicity and travel warnings due to flooding and landslides in May. “The fall in segmental profitability during the quarter was compounded by losses at Anantara Peace Haven Tangalle Resort,” it said.
Mr. Enderby said he anticipates a challenging year ahead for the group’s businesses with the recent developments in the country’s macroeconomic context. “However, we continue to position ourselves for future growth through investing in new facilities, new personal care categories and new geographies with the aim of achieving strong future growth and higher levels of revenue and profitability.”